LEGISLATIVE FISCAL OFFICE
Fiscal Note
Fiscal Note On: HB 3 HLS 243ES 12
Bill Text Version: ENROLLED
Opp. Chamb. Action:
Proposed Amd.:
Sub. Bill For.:
Date: November 27, 2024 9:02 AM Author: EMERSON
Dept./Agy.: Revenue
Subject: Corporate Franchise Tax Repeal Analyst: Benjamin Vincent
TAX/CORP FRANCHISE EN -$574,000,000 RV See Note Page 1 of 2
Repeals the corporation franchise tax and limits eligibility of certain credits to be claimed against corporation franchise tax
(Item #3)
Proposed law entirely repeals Corporate Franchise Tax (CFT), applicable to taxable years beginning on January 1, 2026, and
repeals the applicability of certain tax incentives to CFT liabilities.
All CFT provisions are repealed, including the automatic rate reduction triggers that are assessed each January in current
law. Trigger assessments scheduled for January 2025 in current law are retained, due to bill effectiveness of January 1,
2026.
EXPENDITURES 2024-25 2025-26 2026-27 2027-28 2028-29 5 -YEAR TOTAL
State Gen. Fd. $0 $0 $0 $0 $0 $0
Agy. Self-Gen. $0 $80,000 $0 $0 $0 $80,000
Ded./Other $0 $0 $0 $0 $0 $0
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds $0 $0 $0 $0 $0 $0
Annual Total $0 $80,000 $0 $0 $0 $80,000
REVENUES 2024-25 2025-26 2026-27 2027-28 2028-29 5 -YEAR TOTAL
State Gen. Fd. $0 ($6,000,000) ($23,000,000) ($41,000,000) ($59,000,000) ($129,000,000)
Agy. Self-Gen. $0 ($2,000,000) ($5,000,000) ($5,000,000) ($6,000,000) ($18,000,000)
Ded./Other $0 ($168,000,000) ($502,000,000) ($528,000,000) ($527,000,000) ($1,725,000,000)
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds $0 $0 $0 $0 $0 $0
Annual Total $0 ($176,000,000) ($530,000,000) ($574,000,000) ($592,000,000) ($1,872,000,000)
EXPENDITURE EXPLANATION
LDR reports an anticipated one-time expenditure increase amounting to approximately $80,000 for system design,
development, specification, and testing to accommodate changes to the combined corporate tax return. Any such increase
would come out of SGR collections, as reflected in the table above. Any such expenditure increases will serve to
mechanically reduce net receipts (SGF) by a like amount. LFO assumes that these expenditures would impact FY26.
REVENUE EXPLANATION
The net fiscal impact of this proposal can be approximated by the combined impact on the items discussed below: net CFT
liability, likely migration of nonrefundable credits to other revenue sources, existing carryforwards and credits that are likely
to impact cash collections in FY 26, FY 27 and/or FY 28, and reduced monies deposited to the Revenue Stabilization Trust
Fund (RSTF), which in turn will reduce SGF interest revenue.
For purposes of this fiscal note, LFO assumes that future year collections approximate the collections observed in the tax
return data for the year used in the construction of this analysis (see Page 2 for further detail). Such collections imply that
under proposed law - considered in isolation and not in conjunction with any other proposed laws in the 2024 3rd
Extraordinary Session - total CIFT collections would remain above the $600 million threshold, such that resulting declines in
CIFT collections would not impact SGF revenues, instead reducing collections that would otherwise accrue to the Revenue
Stabilization Trust Fund (RSTF).
Overall net impacts of the bill are reflected in the table above. A brief discussion of major components is below.
Impact on Net Franchise Tax Liabilities of Full Immediate Repeal:
The corporate franchise tax liability change was modeled using returns reflecting 2022 tax liabilities. Recent historical filing
patterns for this tax indicate that 28% of payments due are collected in the year they are incurred, an additional 65% are
collected in the subsequent year, and the remaining 7% are typically collected in the third year. The full (year 3) effect
resulting from full repeal is an estimated $533 million in reduced CFT net liability. Typical filing patterns imply that this
would result in a CIFT revenue reduction of $170 million in FY26, followed by a reduction of $507 million in FY27, and $533
million in FY28 and subsequent years.
Impact on RSTF & Resulting Decline in SGF Interest Revenues
Additionally, interest earnings on the RSTF do accrue to SGF, so a significantly-reduced annual deposit to the trust fund
would result in a material reduction in SGF revenue. (continued on Page 2)
Senate Dual Referral Rules House
13.5.1 >= $100,000 Annual Fiscal Cost {S & H} 6.8(F)(1) >= $100,000 SGF Fiscal Cost {H & S}
Alan M. Boxberger
x 13.5.2 >= $500,000 Annual Tax or Fee 6.8(G) >= $500,000 Tax or Fee Increase
Change {S & H} Legislative Fiscal Officer
or a Net Fee Decrease {S}
 LEGISLATIVE FISCAL OFFICE
Fiscal Note
Fiscal Note On: HB 3 HLS 243ES 12
Bill Text Version: ENROLLED
Opp. Chamb. Action:
Proposed Amd.:
Sub. Bill For.:
Date: November 27, 2024 9:02 AM Author: EMERSON
Dept./Agy.: Revenue
Subject: Corporate Franchise Tax Repeal Analyst: Benjamin Vincent
CONTINUED EXPLANATION from page one: Page 2 of 2
REVENUE IMPACTS (cont)
Impact on RSTF & Resulting Decline in SGF Interest Revenues (continued)
A SGF reduction of approximately $18 million would result for each additional year after FY 28, using recently observed rates
of earnings, for every $533 million that would not be deposited in RSTF. This is reflected as a SGF loss of $6 million in FY 26
(3.3% * $170 million), $23 million in FY 27 ($6 million, plus 3.3% * $507 million), $41 million in FY 28 ($23 million, plus
3.3% * $533 million), $59 million in FY 29, and so on.
Impact on LDR Self-Generated Revenues
Proposed law reduces certain collections that LDR is currently permitted to retain 1% of as SGR, reflected in the table above
as reduced agency self-generated revenues.
Senate Dual Referral Rules House
13.5.1 >= $100,000 Annual Fiscal Cost {S & H} 6.8(F)(1) >= $100,000 SGF Fiscal Cost {H & S}
Alan M. Boxberger
x 13.5.2 >= $500,000 Annual Tax or Fee 6.8(G) >= $500,000 Tax or Fee Increase
Change {S & H} Legislative Fiscal Officer
or a Net Fee Decrease {S}


Statutes affected:
HB3 Original: 47:750(E)(1), 47:6005(C)(1), 47:6006(A), 47:1(A), 47:6008(A), 47:6013(A), 47:6014(A), 47:6015(B)(1), 47:6017(A), 47:6018(B), 47:6019(A)(1), 47:6020(D)(2), 47:6022(E)(1), 47:6028(C), 47:6032(A), 47:6033(C), 47:6036(C)(1), 47:6105(A), 47:6107(A), 47:6108(A), 51:1787(A)(2), 51:3(A)(1), 47:3204(H)(1), 47:4305(B)(1)
HB3 Engrossed: 47:750(E)(1), 47:6005(C)(1), 47:6006(A), 47:1(A), 47:6008(A), 47:6013(A), 47:6014(A), 47:6015(B)(1), 47:6017(A), 47:6018(B), 47:6019(A)(1), 47:6020(D)(2), 47:6022(E)(1), 47:6028(C), 47:6032(A), 47:6033(C), 47:6036(C)(1), 47:6105(A), 47:6107(A), 47:6108(A), 51:1787(A)(2), 51:3(A)(1), 47:3204(H)(1), 47:4305(B)(1)
HB3 Reengrossed: 47:750(E)(1), 47:6005(C)(1), 47:6006(A), 47:1(A), 47:6008(A), 47:6013(A), 47:6014(A), 47:6015(B)(1), 47:6017(A), 47:6018(B), 47:6019(A)(1), 47:6020(D)(2), 47:6022(E)(1), 47:6028(C), 47:6032(A), 47:6033(C), 47:6036(C)(1), 47:6105(A), 47:6107(A), 47:6108(A), 51:1787(A)(2), 51:3(A)(1), 47:3204(H)(1), 47:4305(B)(1)
HB3 Enrolled: 47:750(E)(1), 47:6005(C)(1), 47:6006(A), 47:1(A), 47:6008(A), 47:6013(A), 47:6014(A), 47:6015(B)(1), 47:6017(A), 47:6018(B), 47:6019(A)(1), 47:6020(D)(2), 47:6022(E)(1), 47:6028(C), 47:6032(A), 47:6033(C), 47:6036(C)(1), 47:6105(A), 47:6107(A), 47:6108(A), 51:1787(A)(2), 51:3(A)(1), 47:3204(H)(1), 47:4305(B)(1)
HB3 Act 6: 47:750(E)(1), 47:6005(C)(1), 47:6006(A), 47:1(A), 47:6008(A), 47:6013(A), 47:6014(A), 47:6015(B)(1), 47:6017(A), 47:6018(B), 47:6019(A)(1), 47:6020(D)(2), 47:6022(E)(1), 47:6028(C), 47:6032(A), 47:6033(C), 47:6036(C)(1), 47:6105(A), 47:6107(A), 47:6108(A), 51:1787(A)(2), 51:3(A)(1), 47:3204(H)(1), 47:4305(B)(1)